He was born on Islay, and attended Port Ellen Primary School and Islay High School.[2] He worked between 1984–89 as a hotel manager, after 2 years of study at the University of Glasgow. There, he was a member of the Students' Representative Council[3] and President of the Liberal Club,[4] however he left his course early. He returned to education at the University of Aberdeen, where he gained an LLB in 1992, qualifying as a solicitor in 1993.[2] From 1993 to 1996, he was a Procurator Fiscal Depute for Edinburgh and Aberdeen, and from 1996 to 2001 he was a solicitor with Aberdeen and Macduff.[2]

In June 2009, Carmichael was involved in a successful campaign against the book by Max Scratchmann, Chucking it All: How Downsizing to a Windswept Scottish Island Did Absolutely Nothing to Improve My Life, an irreverent account of the author's experience downshifting from Manchester to Orkney, which Carmichael said was "hurtful and vindictive", and attacked a number of "clearly identifiable" residents of the islands. Carmichael's complaints to the publisher led them to cancel publication.[7][8]

Carmichael retained his seat at the 2015 general election, the only Liberal Democrat in Scotland out of 11 MPs elected in 2010 who managed to do so. The Liberal Democrats also lost the majority of their seats in the rest of the UK, and Carmichael was one of only eight Liberal Democrat MPs returned to Parliament.

Following the resignation of Nick Clegg as party leader, Alistair Carmichael took temporary charge of the Liberal Democrats in the House of Commons,[12] under the de facto leadership of Party President Sal Brinton.[13]

On 4 April 2015, during the general election campaign Carmichael was involved in the leaking of a memo from the Scotland Office about comments allegedly made by the French ambassador Sylvie Bermann about Nicola Sturgeon, claiming that Sturgeon had privately stated she would "rather see David Cameron remain as PM", in contrast to her publicly stated opposition to a Conservative government.[14] The veracity of the memo was quickly denied by the French ambassador, French Consul General and Sturgeon herself.[15]

At the time of the leak, Carmichael denied all knowledge of the leaking of the memo in a television interview with Channel 4 News.[16] After the election, Carmichael accepted the contents of the memo were incorrect, and admitted that he had lied, and that he had authorised the leaking of the inaccurate memo to the media. This was after a Cabinet Office enquiry identified Carmichael's role in the leak. The enquiry found phone records that proved Euan Roddin, Carmichael's Special Adviser, contacted the Telegraph on 1 April, two days before the story appeared.[17] Carmichael apologised and accepted that had he still been a government minister, this was a matter that would have "required [his] resignation".[18]

Four electors from Orkney and Shetland lodged an election petition on 29 May 2015, the last date possible to do this following the general election on 7 May, attempting to unseat Carmichael and force a by-election.[19][20] On 2 June 2015, the Parliamentary Standards Commissioner launched an investigation into his conduct, under sections 10, 14 and 16 of the Code of Conduct,[21] but this investigation was dropped because Carmichael became aware of the memo via the Scottish Office and not in his capacity as an MP.[22] On 9 December 2015, it was decided it had not been proven beyond reasonable doubt that he had committed an "illegal practice"[23] and he was allowed to retain his seat.[24] In February 2016, his application for costs was rejected, leaving him £150,000 out of pocket.[25] Scottish Liberal Democrat leader Willie Rennie contributed £750 towards his costs.[26] Carmichael was awarded £50,000 towards the costs from the Joseph Rowntree Reform Trust.[27]

He married Kathryn Jane Eastham in 1987. They have two sons (born in 1997 and 2001) and the family reside in Orkney. He speaks both French and German. Carmichael is an elder in the Church of Scotland.[28]